Following confirmation by the Government on its outline plans for the UK’s departure from the European Union, the Property Industry Alliance (“PIA”) has come together to identify the opportunities and key considerations that the real estate industry needs to take from Brexit.

The PIA, which brings together leading representative bodies from the UK’s commercial property industry, has also identified five key areas for the Government to consider. The industry group recognises that while Brexit poses risks to the real estate industry, it also opens up opportunities if the Government takes the right steps.

• CAPITAL

Overseas investment in UK commercial real estate is a highly significant driver of GVA and productivity, and must not be put at risk by Brexit. Foreign investors own 28% (£135bn) of UK commercial real estate held as investments (more if housing and student accommodation are included). They also often partner with UK investors and other organisations to drive UK regeneration.  An effective and efficient commercial property market produces investment in the physical and digital, the fabric of towns and cities across the UK, creating jobs, improving environmental performance and generating at least £16bn directly to Government through taxation.

• SKILLS

The real estate industry (including investment/asset management and construction) is highly reliant on the mobility of workers and is already experiencing a skills shortage. We need a post-Brexit response that focuses upon training, skills and the ability to attract and retain talent.

• CONSTRUCTION /DEVELOPMENT

EU public procurement rules are inefficient, often misunderstood and therefore uncertain. Brexit offers a real chance of streamlining the system, which will increase the velocity of investment by reducing unnecessary costs and delays.

• TAX

A simplified and fairer tax regime for the real estate and infrastructure sector post-Brexit would increase domestic activity, retaining and improving our competitive position for investors. The most obvious opportunity is VAT, where the UK’s freedom of action has been constrained in unhelpful ways by European law and the case law of the European Court of Justice.

• SUSTAINABILITY

Brexit represents an opportunity to revamp the complex and somewhat inefficient environmental sustainability regulatory framework, to provide better more efficient long-term solutions and green growth. We would undoubtedly want to retain some UK legislation derived from EU rules, reform other areas and indeed remove particularly ineffective laws.

Bill Hughes, Chairman of the Property Industry Alliance, said: “Real estate is a critical and enabling part of the UK’s economy, shaping our towns and cities and channelling productive investment into the real economy.  The UK asset management industry is one of the largest in the world and a key contributor to the UK economy. Within it, real estate is a core investment asset for private and professional investors, both domestic and global, particularly for its income-generating characteristics. The ability of the industry to continue to undertake cross-border activity from the UK and retain mobility of talent is crucially important.

“The Property Industry Alliance plays an integral part in explaining the role that UK commercial property plays in the UK economy, its importance in improving the built environment and its wider social contribution to local communities. As such, it is critical that we do not sit and wait to see what a post-Brexit world might look like. We have the chance to shape our real estate industry for the benefit of the UK.”

The members of the PIA are the Association of Real Estate Funds (AREF), British Council for Offices (BCO), Revo (formerly BCSC), British Property Federation (BPF), Commercial Real Estate Finance Council Europe (CREFC Europe), Investment Property Forum (IPF), Royal Institution of Chartered Surveyors (RICS) and the Urban Land Institute (ULI).

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For further information, please contact:

Tom Gough
Head of Communications, Legal & General Capital and LGIM Real Assets
020 3124 2777

Faye Walters
PR Manager, LGIM Real Assets
020 3124 2823